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IFC PROVIDES US$47 MILLION IN FINANCING FOR PETROCHEMICALS PROJECT IN VENEZUELA


L. Joseph
Phone: (202) 473-7700
Fax: (202) 974-4384
E-mail: ljoseph@ifc.org


WASHINGTON, D.C., August 23, 1999 – The International Finance Corporation has signed an agreement to lend US$47 million to a new Venezuelan company, Propileno de Falcón Profalca, C.A. (Profalca). The project will provide the Venezuelan petrochemicals industry with a value-added product for sale primarily to regional industrial consumers.
IFC's investment will be used to build and operate a new facility to produce up to 140,000 metric tonnes per annum of polymer grade propylene. Propylene is an intermediate product, which is used for production of polypropylene, a type of plastic used extensively in consumer and chemical products. The plant is located on an existing industrial site where the bulk of raw material and all utilities are available.
The project's shareholders are Productos Especiales Proesca, C.A. (Proesca), a wholly owned subsidiary of Petróleos de Venezuela, S.A. (PDVSA), Venezuela's national oil company; Koch Petroleum Corporation; Empresas Polar (Polar), Venezuela's largest privately held industrial group; and Inelectra, Venezuela's largest engineering and construction company.
PDVSA is one of the world's largest oil and gas companies and is heavily engaged in various downstream activities, including petrochemicals. Koch Petroleum Corporation is a subsidiary of Koch Industries, Inc., a diversified U.S.-based energy concern, which is involved in the oil, gas, and chemicals industries worldwide. Polar is Venezuela's largest privately held industrial group, whose core business is the manufacture and distribution of beverages, foods, and related products with other investments in the Venezuelan oil and petrochemicals industries. Inelectra, one of the largest Venezuelan private companies, is active in engineering and construction, telecommunications and information systems, and oil and gas exploration and production. Inelectra is the general contractor of Profalca.
Mr. Richard Parry, IFC associate director for chemicals and petrochemicals, said that IFC's investment provides much needed long-term financing for a transaction that has strong partners with exceptional knowledge of the market. The project is an example of IFC support to an internationally competitive project in the Venezuelan private sector. Mr. Parry added that IFC's investment will reinforce the downstream integration of the Venezuelan petrochemicals industry, a key component of the country's industrial base.
IFC's financing for the $104 million project consists of a loan of $24 million for its own account and a syndicated loan of $23 million for the account of participants. This investment will complement a number of others completed by IFC's chemicals, petrochemicals, and fertilizers department in Venezuela, including investments in the production of polypropylene, ethylene glycol, hydrogen peroxide, and methanol.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.